Ehrlich Corporation incurred the following transactions. 1. Purchased raw materials on account $48,000. 2. Raw Materials of $43,900 were requisitioned to the factory. An analysis of the materials requisition slips indicated that $7,000 was classified as indirect materials. 3. Factory labor costs incurred were $87,000. Time tickets indicated that $82,000 was direct labor and the rest was indirect labor. Direct laborers were paid at a rate of $20 per hour. 4. Rent incurred was $79,500. 70% was for the factory and 30% was for the corporate offices. 5. Factory depreciation was $13,000. 6. Administrative salaries accrued were $25,000. 7. Advertising costs of $10,000 were incurred on account. 8. Manufacturing overhead was applied at the rate of $16 per direct labor hour. 9. Goods costing $90,000 were completed and transferred to finished goods. 10. Finished goods costing $80,000 to manufacture were sold at a profit of $40,000. Instructions: Journalize the transactions.
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
5.
Ehrlich Corporation incurred the following transactions.
1. Purchased raw materials on account $48,000.
2. Raw Materials of $43,900 were requisitioned to the factory. An analysis of the materials requisition slips indicated that $7,000 was classified as indirect materials.
3.
4. Rent incurred was $79,500. 70% was for the factory and 30% was for the corporate offices.
5. Factory
6. Administrative salaries accrued were $25,000.
7. Advertising costs of $10,000 were incurred on account.
8. Manufacturing
9. Goods costing $90,000 were completed and transferred to finished goods.
10. Finished goods costing $80,000 to manufacture were sold at a profit of $40,000.
Instructions:
Journalize the transactions.
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